What are the benefits of Bitcoin?
Bitcoin has certain features that make it a great product to invest in. The digital currency is first of all completely decentralized, there is no intervention of a third party or intermediary needed and, because of the process of mining and staking, the transactions with Bitcoin are very reliable.
First of all, unlike ‘normal’ currencies, Bitcoin is completely decentralised. This means that governments and banks cannot influence the price and value of the currency. They cannot print money to improve the economic state. It is already known how many Bitcoins exist today and how many will be produced in total.
This means that compared to other ‘normal’ currencies that are centralized, with Bitcoin there is no need to trust a certain bank or institution. Nobody has the ‘power’ to manipulate the coin and this makes Bitcoin a relatively ‘fair’ and autonomous currency. For a lot of people this is a big advantage to Bitcoin.
Transactions without an intermediary
In addition, Bitcoin is a peer-to-peer payment system. This eliminates the need for a middleman or third party to make the payment happen, such as a bank or a merchant. Also, Bitcoin transactions are recorded and processed using an online ledger called Blockchain. This automated ledger and the lack of a middleman makes transactions easy, discrete, and less expensive (especially for international payments).
Finally, Bitcoin transactions are extremely secure because of this automated Blockchain system. Since every transaction is checked several times, it is practically impossible to make mistakes or commit fraud.
Transactions can be tracked and verified by participants throughout the chain, a process called mining. Anyone with access to the internet and suitable hardware can participate in mining, and even earn rewards.
This motivation provides sufficient control and creates a transparent and watertight system of transactions. Regardless of whether the transactions are national or international.
In addition to mining Bitcoin, there are also people who do Bitcoin staking in support of the Blockchain network. Staking – as the word might suggest – means that people are tying up crypto-currency in exchange for a reward.
By tying up their currency, they also gain the right to verify and secure transactions in the Blockchain. So, like mining, this helps to keep the Blockchain network fair and prevent fraud.
In short, through financial incentives, Blockchain participants are motivated to help maintain the Blockchain and prevent fraud. Through mining and staking, they receive rewards in exchange for the monitoring and verification of transactions.
How to get bitcoins?
If you want to get started with cryptocurrency after reading this, the question that remains is of course: Where and how do I buy Bitcoins? There are several ways to do this: via a broker, from an exchange or via a peer-to-peer platform
Via a broker
First of all, an easy way to buy Bitcoins is through an online exchange, also called a broker. At an online exchange, it is very easy to make your payment because you can simply pay with iDeal and pay in Euros.
All you need to do is create an account and verify your identity to prevent fraud. You can usually do this easily via the website by, for example, transferring a small one-off amount of one cent or by filling in a code that is sent to you by text message.
From an exchange
You can also buy Bitcoin from an exchange. These are platforms that do not sell Bitcoin themselves but bring together people on the platform who want to buy or sell Bitcoin. So you buy the Bitcoin that other people are selling to/on the platform and you do not buy it from the platform itself.
If you want to buy Bitcoin from an exchange, you should be aware that these exchanges often want to acquire more information from you than a broker if you want to make a transaction. In addition to the standard information, they often ask for a copy of your identity and sometimes an address verification.
Via a peer-to-peer platform
Finally, there are platforms where you can buy Bitcoin directly from another person. These platforms act solely as a marketplace where you can buy Bitcoin from other users. This allows you to buy Bitcoin quite anonymously, but of course it comes with the risk of unreliable sellers.
Something that many people who want to start with investing in cryptocurrency wonder about is, of course, what the expectation of the cryptocurrencies is. Which cryptocurrency is going to rise and which will not be profitable anymore?
You can keep up with the cryptocurrency news, but you can never be sure what the price of Bitcoin or altcoins will do. Nevertheless, the expectation is that investing in cryptocurrencies is still a good move at the moment.
Experts are also positive about Bitcoin’s price prediction. As the supply of new Bitcoin will be cut in half by 2020, a so-called ‘block halving’ or ‘bitcoin halving’, the price will rise with equal demand for the digital currency. Which means Bitcoin will still be a good investment to make.